1 August 2019

Subcontracting Policy

2019/20

Signed by Senior Leadership Team:

Chris McMahon – Executive Chairman ………………………………………………………

Jo Sellers – Operations Director ………………………………………………………………

Linda Clarkson – Director of Quality & Curriculum ……………………………………….

Ceri Halifax – Director of Finance ……………………………………………………………. Ceri Halifax

2 August 2019

Table of Contents

1. Scope .............................................................................................................................................. 3

2. Context ........................................................................................................................................... 3

3. Overarching Principle ................................................................................................................... 4

4. Definition of Sub‐Contracting ...................................................................................................... 4

5. Rationale for Sub‐Contracting .................................................................................................... 5

6. Quality Assurance ......................................................................................................................... 5

7. Communication

8. The Fees and Charges Risk Factor Table

9. Additional Support for Sub‐Contractors ..................................................................................... 7

10. Additional Charges per learner ................................................................................................ 8

Annex 1 – Due Diligence Checks .................................................................................................... 9

Annex 2 – Quality Assurance Measures ....................................................................................... 11

Annex 3 – Fees and Charges Structure ........................................................................................ 13

3 August 2019

1. Scope

The policy applies to all supply chain activity supported with funds supplied by the

Education Skills Funding Agency or any successor organisations.

2. Context

The policy is now a mandatory requirement that must be in place prior to

participating in any sub‐contracting activity. The content of this policy has been

developed in line with, the ESFA Funding rules and the LSIS Supply Chain

Management document.

The Education Skills Funding Agency defines a sub‐contractor as an organisation

that is engaged in a contractual and legally binding arrangement with a lead

provider to deliver provision ultimately funded by the Educations Skills Funding

Agency(ESFA).

YH Training Services Ltd (YH) has a long history of working with select sub‐

contractors and partners to deliver high quality teaching and learning. YH

currently subcontracts with a small number of mainly established providers

providing niche provision across the Yorkshire and Humber which YH does not

currently provide itself. Our sub‐contracted and partnership provision has

included learner responsive delivery to 16‐18 year old learners, apprenticeship

provision, and learner responsive delivery to adult learners in a variety of settings.

Subcontractors and partners have been used to engage a variety of

communities some of which have typically been underrepresented in further

education across the region.

As a result of funding changes and an anticipated increase in the proportion of

our curriculum that is delivered directly, YH will reduce the scale of its sub‐

contracted provision in 2020/21.

Because of this, YH will prioritise the engagement of sub‐contractors that:

Can demonstrate consistent delivery of the highest quality teaching and

learning.

Can facilitate a high level of progression into employment or higher learning

for our learners.

Are financially secure and can enter into a sustainable relationship with YH

Training

Have or are committed to adopting robust quality assurance and

improvement processes that complement those in place at YH.

Our sub‐contracted and partnership delivery is overseen by the Senior Leadership

Team (SLT) and supported on a day to day basis by the Hull Area Learning

Manager.

4 August 2019

SLT will receive a regular report on the scale and mix of our sub‐contracted

provision through the monthly management accounts.

YH has sought to ensure sub‐contractors and delivery partners are fully engaged

with our teaching and learning quality assurance processes. Our sub‐contracted

provision has been subject to lesson observation and learner journey audits in the

same way as our directly delivered programmes of study.

YH will seek to ensure that where appropriate, sub‐contractors and delivery

partners adopt our approach to self‐assessment and quality improvement.

3. Overarching Principle

YH will use its supply chains to optimise the impact and effectiveness of service

delivery to the end user.

YH will therefore ensure that:

a. YH will at all times undertake fair and transparent procurement activities,

conducting robust due diligence procedures on potential sub‐contractors to

ensure compliance at all levels and to ensure the highest quality of learning

delivery is made available, demonstrating value for money and a positive impact

on learner lives.

b. The funding that is retained by YH will be related to the costs of the services

provided. These services, and the levels of funding being retained for them, will

be clearly documented and agreed by all parties. The rates of such retained

funding will be commercially viable for both sides and will be negotiated and

agreed in a fair and transparent manner.

c. Where disputes between supply chain partners cannot be resolved through

mutually agreed internal resolution procedures, YH will submit to independent

outside arbitration or mediation and abide by its findings. Contract documents

will require both parties to agree that the achievements of supply chains are

attained through adherence to both the letter and spirit of contracts or

partnerships. Signatories therefore commit that all discussions, communications,

negotiations and actions undertaken to build, maintain and develop supply

chains will be conducted in good faith in accordance with the Overarching

Principle.

4. Definition of Sub‐Contracting

What is a lead provider?

A lead provider is a college, training organisation or employer that has a direct

contractual relationship with the ESFA.

5 August 2019

What is a Sub‐Contractor?

A sub‐contractor is an organisation that is engaged in a contractual and legally

binding arrangement with one or more lead providers to deliver provision that we

fund. Sub‐contractors may be informally called partners in the sector. However,

for ESFA purposes, they are classified as sub‐contractors.

5. Rationale for Sub‐Contracting

YH has a strategic aim to minimise the level of sub‐contracting entered into. YH

aim to use its funding allocations to support our local learners, employers and

communities through direct delivery. Minimising levels of subcontracting also

reduces the exposure to risk of poor performance by other organisations.

YH will in the first instance consider direct delivery. However, YH recognises the

benefits that effective sub‐contracting can bring in extending the range and

accessibility of provision for learners and employers and will consider sub‐

contracting in the following circumstances:

• Where our existing employers or learners require additional provision which is

beyond our existing scope or capacity

• Where subcontracting will allow us to meet short term needs of learners or

employers without exposing us to the risks and entry and exit costs of setting

up new provision

• Where sub‐contracting will allow us to capacity‐build in new sectors or

territories to allow us to move to a position of direct delivery or to grow

income such as 16‐18 apprenticeship funding

• For very specialist provision which YH would not be able to adequately

resource.

6. Quality Assurance and Improvement

The quality of the provision will be monitored and managed through the existing

YH Training Quality processes and procedures.

This policy positions sub‐contracted provision as a core part of YH activity to

enable continuous improvements in the quality of teaching and learning for both

YH and its sub‐contractors. This will be achieved through the sharing of effective

practice across the supply chain, for example through the Self‐Assessment Report

process.

All Sub-Contractors with combined contract values of over £100,000 must be

approved on ROTO for AEB and ROATAP for apprenticeship delivery

As minimum YH will carry out the following Quality measures with subcontractors;

Desk top checks and due diligence visit for new providers

Annual due diligence review for existing providers

6 August 2019

Quarterly Contract Reviews and management meeting to review success

rates, quality improvement, safeguarding etc

Annual survey of learners

Annual survey of employers (if applicable)

Annual Learner Journey Audits to review the learner documents

IQA Visits where provision is under our awarding body centre approval

Self‐Assessment Monitoring visits (SAMs)

Annual audit of MIS data including enrolment forms and attendance records

Lesson or session observations

Staff CPD

Risk Management activities

Risk Factor Table includes:

The typical percentage range of fees retained to manage sub‐contractors, and how

this range is calculated is listed below.

The rationale used to determine the level of fee retained through each sub‐contract

is a risk based approach.

The contributory risk factors that would result in differences in fees charged for, or

support

Type of customers to be engaged

provided

Previous track record

Quality Improvement processes

Success levels

Type of provision to be undertaken

Contract duration

The risk bands will be used to allocate YH charges. Risk factors are given a score so

that each sub‐contractor is aware of why they are in a particular band, this process

will be used to give sub‐contractors an incentive to improve and thus reduce the risk

band that they fall in. For example, higher risk sub‐contractors will be allocated less

funding but receive more monitoring and support.

7. Communication

This policy will be reviewed in each summer term and updated as required.

8. The Fees and Charges Risk Factor Table

Due to the additional requirements on apprenticeship delivery , specifically the

need to monitor the receipt of compulsory employer contributions and the need to

monitor the delivery of 20% off the job training, our management fee is as follows:

For established providers with at least 3 full years delivery our standard fee is 17.5%

7 August 2019

This will be reduced if the following applies:

Apprenticeships:

If achievement rate equivalent to national rate for sector or 70% as a

minimum , minus 2% = 15.5%

Use of eportfolios – 1% = 14.5%

Use of electronic files – 1% = 13.5%

Satisfactory compliance – 1% = 12.5%

AEB:

If achievement rate at 85% at least, minus 2% = 15.5%

Employment progression minimum of 35%, minus 1% = 14.5%

Use of electronic files – 1% - 13.5%

Satisfactory compliance, minus 1% = 12.5%

16-19 young people:

If achievement rate at 70% at least, minus 2%= 15.5%

Positive progression of at least 70%, minus 1% = 14.5%

Use of electronic files, minus 1% = 13.5%

Satisfactory compliance, minus 1% = 12.5%

Therefore for established providers there is an opportunity for the standard

management fee to be only 12.5%.

Further charges to cover additional costs may be added to the standard fee to

cover the cost to YH of any additional support that YH deems necessary to ensure

the quality of teaching and learning and the success rates of any sub‐contracted

provision. Additional cost is determined using a weighted table of risk factors. The

table is available to all actual and potential sub‐contractors. It is designed to ensure

that the cost of any additional support provided to a subcontractor is covered

through the funding retained. Additional costs will be re‐calculated and negotiated

each year at contract renewal, giving sub‐contractors the opportunity to reduce

their fees through continuous improvement. This approach will allow Resources to

focus support where and when it is needed.

See Annex 2

9. Additional Support for Sub‐Contractors

The precise additional support given to each sub‐contractor will be negotiated with

that subcontractor, but will be based on a ‘risk band’ approach and may include:

• Additional site visits

8 August 2019

• Additional lesson observation

• Additional tutor support

• More rigorous verification and audits

The risk band will be determined using the table in annex 2.

10. Additional Charges per learner

YH may also retain funding to cover the cost of any funded activity that it might

undertake on behalf of the sub‐contractor such as:

Awarding Organisation fees

and charges

Hiring of facilities/equipment

within/from YH

Internal Verification

Off the job training for learners if applicable

11. Termination of contract and variances

If for whatever reason the sub-contractor wishes to terminate the agreement with

YH, they can do so by serving 3 months’ notice to YH. However, the subcontractor

will not be entitled to transfer the financial value of its subcontract with YH to

another lead provider.

If YH identifies any issues or any aspects of the contract that the sub-contractor is not

following, these will be discussed with them and a necessary action plan will be

drawn up, which will hopefully lead to the necessary improvements. The action plan

will provide a maximum of 3 months for any issues to be rectified. If they have not

been rectified by the end of this period, then YH will have to give serious

consideration to serve notice on the sub-contractor to terminate the contract and

this notice period to terminate the contract will last for 3 months. YH will of course

offer any necessary help and guidance to ensure there are no non-compliance

issues. Where appropriate YH my impose sanctions on the sub-contractor, for

example suspending all new starters.

If YH is informed by the ESFA that they must terminate the subcontract, then this

would be carried out under ESFA guidance.

YH reserve the right to not re-contract with any of our existing providers where any

provider has failed to meet due diligence requirements and/or is deemed as high

risk.

Where the subcontracting is failing to meet the contract value and therefore an

underspend is projected YH reserve the right to reduce the contract value at any

point. Any variance to increase an existing contract must be made in writing to YH.

The request should include:

A description of the proposed provision

9 August 2019

The numbers of learners

Value of the variance

A description if the delivery

Quality assurance measures

Annex 1 – Due Diligence Checks Sub‐Contracting Requirements

Due Diligence documents required for desktop assessment Notes / Resources Actions

Copy of latest set of audited accounts To be reviewed by Managing Director & Director of

Finance

Full names of all Heads / Trustees / Senior Managers

Complete company house check

Copy of most recent Ofsted report Require grade 1 ‐2

Copy of most recent Self‐Assessment Report (SAR) – where

applicable

Require grade 1 ‐2

CVs for all staff delivering training / assessment To be reviewed by Operations Director and Director

of Quality and Curriculum

Copy of contract of employment / evidence of contract of

employment for all staff delivering training/assessment To be reviewed by Operations Director and Director

of Quality and Curriculum

DRB numbers for all staff delivering training /assessing To be reviewed by Operations Director

Copy of staff certificate for the member (s) of staff responsible for

training/assessing To be reviewed by Operations Director and Director

of Quality and Curriculum

Copy of Health & Safety Policy To be reviewed by Operations Director

Copies of risk assessments To be reviewed by Operations Director

Copy of Risk register for Prevent To be reviewed by Operations Director & Lead

safeguarding officer

Copy of Crisis management Plan To be reviewed by Operations Director

Copy of Employers/Public/ Occupiers liability insurance certificate Minimum

£10 million for Employers Liability Insurance £5

million for Public Liability Insurance.

Certificate to be in date.

Evidence of Initial Advice & Guidance (IAG) and IAG Policy

Copy of Complaints procedure To be reviewed in line with YH policy

Copy of equality and diversity procedure To be reviewed in line with YH policy

Copy of Safeguarding Policy To be reviewed in line with YH policy

Copy of Mission Statement To be reviewed in line with YH policy

10 August 2019

Copy of Data Protection and Privacy Policy (GDPR) To be reviewed in line with YH policy

Copy of Awarding Body Centre Approval – where appropriate To match qualifications being delivered

Copy of most recent External Verifiers Reports where appropriate To be reviewed for serious issues

The Sub‐Contractor will provide the following:

Required during Funding Year Frequency / Due by

Return signed contract and appendices Before 1st August / start of delivery programme

Deliver the Programme (s) in accordance with YH

arrangements

In line with the YH timetable

Self‐Assessment Reports in line with the YH requirements In line with the YH timetable

Signed and fully completed enrolment form/ILR for each learner;

(Copy of recent benefits, residency evidence etc to be kept on

file)

Within 3 weeks of the course commencing

Full registers or contact records Checked on audit.

Withdraw any learners who have missed more than 4

consecutive weeks

Within 1 month after missing 4 consecutive

weeks

Copies of achievement certificates as soon as

received from the Awarding Body including ACE certificates

As Soon as received – ACE certificate to be

received no later 3 months after learner

achievement date

Copies of all EV reports Checked on Audit

Feedback questionnaires from learners In line with the YH timetable

Raise invoices per agreed payment amounts and schedule Per agreed schedule

11 August 2019

Annex 2 – Quality Assurance Measures

YH will score each performance indicator as follows:

Performance

Indicator

Risk Rating Score

Low Medium High No Measurable

1 2 3 3

Delivery experience of

the sub‐contractor

More than 3 full years of this type of provision

1-2 full years of

this type of

provision

Less than 1 full years of this type of provision

No experience

Previous years success

rate

Apprenticeship

75%

Apprenticeship 70% Apprenticeships

less than 70%

No previous

delivery record

AEB – 85% AEB – 75- 84% AEB- Less than

75%

16-19 -70% 16-19 – 60-69% 16-19 – less than

69%

Accuracy of SAR and

Ofsted or SAR grading

Grade 1 or 2 Grade 2 -3 Grade 4 No Ofsted

Grading

Safeguarding

(Including Prevent risk

register)

Provision deemed to be low risk all policies and procedures in place, staff CPD current

Medium risk eg

Some development required

Provision deemed to be high risk – Insufficient controls in place to safeguard learners and staff

No policies and procedures in place

Policies and procedures

identified in Due

Diligence

Up to date policies and procedures as identified in the Due diligence check list

Some policies

need to be updated

Not all policies and procedures are in place

No policies and procedures in place.

Contract audit and

QA measures

Compliant and no actions or recommendations

Mainly compliant but recommendations to improve

Not compliant and actions required to improve

No previous audit as new provision

Learner Journey Audit

and QI measures

Grade 1/2 with very good QI and good action planning

Grade 2/3 with some QI measures

Grade 3 with actions to improve QI

Grade 4 QI requires improvement

12 August 2019

Overall Score Risk Rating Fees

5-7 Low 12.5% - 17.5%

8-18 Medium 20%- 25%

19-24 High 30%

13

August 2019

Annex 3 – Fees and Charges Structure The following activities are included in the standard contract management and covered by the retained

funding element;

Activity Number/Frequency included in standard retained funding element

Pre‐Contract Processes

Due diligence desk top checks 1 at set‐up

Due diligence visit 1 per site up to 3 sites

Annual due diligence 1 per year

Issuing standard sub‐contract agreement 1 per year

MIS Processes

Issuing YH document templates and forms to be used by the subcontractor As and when amended

Agreeing use of sub‐contractor templates and forms (if at least as good as YH

documents)

1 per year

Entering learner data and amendments onto PICS (MIS) All

Entering attendance data and reconciling with ILR All

Calculating fees due and processing payments received All

Data‐match checks with other main contractors with whom the subcontractor works All

Quality Assurance Processes

Quality assurance visits and lesson/assessor observations At least 2 per year

SAM meetings At least 1 per year

Annual survey of learners (in addition to your own surveys) 1 per year

Annual survey of employers (if applicable) (in addition to your own surveys) 1 per year

Annual audit of MIS data including enrolment forms and attendance records 1 per year

Learner Journey Audits - Review of learner documents including tracking records,

reviews and ILPs (in addition to your own)

1 per year

Annual review of the sub‐contractor provision within YH Self-Assessment process

and Quality Improvement Plan

1 per year

Sub‐contractor staff to attend YH CPD activity As required

14

August 2019

The below will be implemented from August 1st 2019.

The following rates will apply to additional services which Resources may provide for the subcontractor;

Service Cost

Registration of learners on YH approval with Awarding Bodies Cost + 10%

Certification of learners from awarding body Cost + 10%

Certification of apprentices with ACE Cost + 10%

Internal verification To be agreed depending on

provision

Providing consultancy support (Senior level) £70 per hour